Punjab 'ready' to slash tax on petrol to 30%

Updated: Wednesday, December 23, 2015, 20:55 [IST]

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Chandigarh, Dec 23: Unsure of northern states raising tax on petrol to its level, Punjab is now "ready" to bring down tax on fuel by more than five per cent if other states like Haryana, Delhi, agree to raise respective tax rates to 30 per cent in order to bring uniformity in rates on fuel.

Punjab hopes that by reducing tax on petrol, its revenue may not be hit as it will be compensated by increase in petrol sale in border districts, adjoining Chandigarh, Haryana, Himachal Pradesh and Jammu and Kashmir.

"We are ready to reduce our taxes on petrol to 30 per cent as other northern states will not raise their tax to our slab (36.44 per cent)," said an official of Punjab Excise and Taxation department here.

"We are making efforts to convince states like Haryana, UT Chandigarh, Delhi, Himachal Pradesh to increase VAT on petrol to 30 per cent," he further said adding, "We know that no state will be ready to raise their tax rates to our tax slab on petrol."

At present, tax on petrol in Punjab is highest among northern states. Punjab at present levies tax including VAT, cess on petrol at the rate of 36.44 per cent whereas tax on petrol in Haryana, Chandigarh, Delhi, Jammu & Kashmir, Himachal Pradesh is 26.25 per cent, 24.74 per cent, 24 per cent and 27 per cent respectively.

"Our revenue loss will be compensated with the increase in sale of petrol in border districts," he asserted.

Yesterday, Punjab Cabinet had given its nod to constitute a committee Deputy Chief Minister and Finance Minister to take decision with regard to increase or decrease VAT/ID (Infrastructure Development) cess on petrol in bid to rationalize the Value Added Tax on petrol in Punjab and neighbouring states of Haryana, Himachal Pradesh, Jammu & Kashmir, Rajasthan and Union Territory Chandigarh.

Petroleum dealers in Punjab, however, have asked the state government to reduce tax rate on petrol to the level of 26 per cent which will be at par with neighbouring states.

Dealers said, "as per a survey conducted in the border areas of Punjab, the sale of petrol pump located in the state was less because of price differential."

"If the Punjab government reduces its tax on petrol to 26 per cent, then its sales can zoom by 3.9 lakh kilo litres from 9.2 lakh kilo litres per annum as sales will shift from Himachal Pradesh, Haryana, Chandigarh, Rajasthan and Jammu and Kashmir to pumps located in border areas of Punjab," said Ashwinder Mongia, President, Mohali Petroleum Dealers Association.

Significantly, this year, tax on diesel in Delhi, Haryana and Chandigarh, Punjab, Himachal Pradesh were raised to 16.60 per cent, 16.40 per cent, 16.40 per cent, 14.74 per cent and 16 per cent respectively.

The move had come in the wake of decision taken by northern states -- New Delhi, Punjab, Haryana, Himachal Pradesh and UT Chandigarh to rationalize present tax regime by implementing a uniform tax structure (UTS) in these states view to eliminate evasion of taxes and curb smuggling of goods through state borders.